A BRP logo is shown at the research and innovation plant in Valcourt, Que., Friday, November 9, 2012. BRP Inc. raised its financial guidance as it reported a third-quarter profit of $135.3 million, up from $90.2 million in the same quarter last year. THE CANADIAN PRESS/Graham Hughes.
Republished November 27, 2019 - 9:59 AM
Original Publication Date November 27, 2019 - 4:41 AM
BRP Inc. rode sales of three-wheeled and utility vehicles to record third-quarter revenues, boosting its financial guidance for the third time this year.
The maker of Ski-Doo snowmobiles and Sea-Doo watercraft saw profits jump by 50 per cent year over year to $135.3 million last quarter.
"Our efforts are paying off, and we don't intend to ease up," chief executive Jose Boisjoli said.
Much of the Quebec-based company's $1.64-billion revenue — up nearly 18 per cent from a year earlier and a record for the third quarter — came from sales of its Can-Am side-by-side vehicles. Their revenues grew by more than 30 per cent, more than double the industry rate for side-by-sides, BRP said.
Sales of its three-wheeled roadsters jumped nearly 90 per cent, propelled by the new Can-Am Ryker. With a starting price of US$8,500, the sporty trike almost halves the price tag of its older cousin, the Can-Am Spyder, in a bid to attract riders who are younger and more cost-conscious than BRP's typical three-wheel buyer, whose average age is 59.
About 30 per cent of Ryker buyers are women, and 70 per cent are under 55, Boisjoli said.
Snowmobile sales jumped nearly 30 per cent thanks to early snowfall "that has spiked customer interest," he added.
Marine product sales continued to lag, however, dropping by about $1 million or one per cent as higher boat revenues after a recent acquisition failed to completely make up for fewer outboard engine purchases.
"I would say it was not the best season for our first boat business," Boisjoli said on a conference call with investors Wednesday.
In August the company closed a deal to acquire a majority stake in Australia's largest aluminum boat maker, Telwater Pty. Ltd., the firm's third push into watercraft over the past year and a half after buying Alumacraft Boat Co. and Manitou Pontoon Boats in the summer of 2018.
"Our marine strategy is a mid- to long-term play. And that's why we've decided to invest in companies and become a better integrator of engines within boats," said chief financial officer Sebastien Martel.
"That improvement in our business will materialize not next year, but in fiscal year 2022 and in fiscal year 2023," Martel said.
He also played down concerns about a possible economic downturn.
"Demand is still there, and the consumer is still looking into the stores to buy goods," he said. "We're not seeing any changes in consumer behaviour from what we saw in Q3 and what we saw in the previous quarters of the year."
In its outlook, BRP said it now expects full-year revenue to grow 12 to 14 per cent compared with the earlier guidance for growth of 10 to 13 per cent. Full-year normalized earnings per diluted share are expected to come in between $3.70 and $3.80, up from an earlier forecast of between $3.65 and $3.80.
Desjardins Securities analyst Benoit Poirier called BRP "unstoppable."
"This increase is largely supported by stronger growth expectations for the powersports group" — side-by-side vehicles, ATVs and motorized trikes as well as Sea-Doos and Ski-Doos — Poirier said in an investor note.
In the quarter ended Oct. 31, BRP's profit amounted to $1.49 per diluted share for the quarter ended Oct. 31, up from 92 cents per diluted share a year earlier.
Revenue totalled $1.64 billion, up from $1.39 billion in the same quarter last year.
Normalized earnings per share came in at $1.51 per diluted share, up from $1.04 per diluted share a year ago.
Analysts on average had expected a profit of $1.31 per share on nearly $1.51 billion in revenue, according to financial markets data firm Refinitiv.
BRP shares opened at a year high of $67 before dropping down to $63.06 in early afternoon trading, up 43 cents, on the Toronto Stock Exchange.
This report by The Canadian Press was first published Nov. 27, 2019.
Companies in this story: (TSX:DOO)
Note to readers: This is a corrected story. An earlier version said the company boosted its guidance for a second time this year.
News from © The Canadian Press, 2019